Reuters: US Dollar Report: FOREX-Euro rises after hitting 2-week lows, Spain budget unveiled

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FOREX-Euro rises after hitting 2-week lows, Spain budget unveiled Sep 27th 2012, 17:01 Thu Sep 27, 2012 1:01pm EDT * Spanish releases budget for 2013 * Euro rebounds from two-week lows vs dollar, yen * Support for euro seen at 200-day moving average near $1.2826 * ECB Draghi will visit Germany's Bundestag By Julie Haviv NEW YORK, Sept 27 (Reuters) - The euro gained against the U.S. dollar and yen on Thursday, having tumbled earlier to two-week lows after Spain unveiled its 2013 budget amid persistent uncertainty over whether and when it might ask for an international bailout. Spain announced a detailed timetable for economic reforms and a tough 2013 budget based primarily on spending cuts on Thursday in what many see as an effort to pre-empt the likely terms of any international bailout. "The Spain news was not positive in my opinion, which is why the euro initially sold off, but short covering eventually took hold and the euro moved higher," said Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman in New York. Uncertainty over the timing of an aid request and divisions within the European Union over a plan to create a banking union sent the yield on Spain's 10-year bond on Thursday to its highest since the ECB announced its bond-buying plan on Sept. 6. "Overall, people are still digesting the news and whether Spain asks for a bailout is still a question mark, so there is nothing too bullish here," he said. The euro last traded at $1.2894, up 0.2 percent and sharply above a trough of $1.2827 hit earlier in the session, which was its lowest since Sept. 12. The euro has support at the 200-day moving average near $1.2826 and around $1.2740, the 38.2 percent retracement of the July to September rally. Against the yen, the euro fell as low as 99.62 yen , the lowest since Sept. 13. It last traded at 100.14, up 0.1 percent on the day, according to Reuters data. Adding to concerns over Spain, the indebted Castilla La Mancha region may seek 800 million euros ($1 billion) in emergency funding from the central government, regional and party sources said on Thursday. Most strategists said the euro was likely to appreciate if and when Spain requests a bailout to trigger ECB bond-buying, although gains would be curbed by concerns about Greece. Demonstrators clashed with police in Athens and Madrid this week in protest over new austerity measures. Greece's international lenders are at loggerheads over how to respond to its debt crisis, threatening more trouble for the euro in the coming weeks. A Moody's review of Spain's ratings is also expected this week. A cut could take the country below investment grade and put further pressure on policymakers. European Central Bank President Mario Draghi will visit Germany's Bundestag lower house of parliament for talks with lawmakers on the euro zone debt crisis, the Bundestag said on Thursday. Many German lawmakers have major reservations about the ECB's plans to buy bonds from heavily indebted euro zone states to help lower their borrowing costs, although Chancellor Angela Merkel has made clear she supports the program. Meanwhile, talk that Chinese authorities might take steps to prop up the country's stock markets had earlier bolstered riskier currencies like the Australian dollar and lent some support to the euro against the safe-haven dollar and yen. China's securities regulator holds a regular meeting on Thursday. MYRIAD OF MIXED U.S. DATA An array of U.S. data, meanwhile, painted a mixed economic picture. Orders for long-lasting U.S. manufactured goods dropped sharply in August suggesting the main engine of economic growth was stalling, offsetting hopeful signs of an improvement in the labor market. A separate report showed the number of Americans filing new claims for jobless benefits fell 26,000 last week to a two-month low. Additionally, U.S. economic growth was much weaker than previously estimated in the second quarter as a drought cut into inventories. Also, U.S. data showed pending home sales dipped in August due to a supply shortage. The dollar last traded down 0.1 percent against the yen at 77.64 yen and remains within sight of a seven-month high of 77.13 hit on Sept. 13, the day the Federal Reserve announced a new round of monetary stimulus. Link this Share this Digg this Email Reprints

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